14 Unit Multi! Is it a buy? I want it so bad I can taste it.

[Dustin Moore]

About the units...

• 10- 2br1ba(built in 1975), 4- 3br1ba(built in 2002)
• single story, brick
• Taxes - $8,900 yr 
• Insurance - not sure 
• Great Rental History! 100% current occupancy. 
• Asking Price $499,000. 
• Avg Yearly Gross Income - $90,000.

The complex is in a solid B neighborhood. The owner wants to sell so he can relocate his investment efforts to another area (where he wants to retire.) I don't have any info on previous maintenance expenses, other than the write up says "units updated during every vacancy". What am I missing?? Be brutal.

Thanks for any and all feedback! You guys are awesome!

[Andrew Johnson]

@Dustin Moore This isn't too brutal but...

1. If you're selling just to retire you don't let the property sit on the market a year.  You just don't.  The local market has passed on his $500K asking price so they know something you don't know.  Nothing sits on the market for a year and (also) doesn't get picked through by local investors.
2. I don't see any mention of how utilities, trash, etc. work.  Even if electric and gas are individually metered, odds are that water isn't.  And if there's a dumpster (best guess for 14 units) you want to know if the tenants are paying a portion of it or if you (the owner) have to provide that dumpster service yourself, maybe just rent the dumpster, etc.  If you're paying the heating bill and the windows are original single-pane 1975 windows...well...you can figure that one out...
3. In most cases (and I have no clue where this property is...and have less knowledge of Mississippi) you won't see $500/month rent in "B" areas.  Since you're admittedly emotional about this one I'd be a box of donuts it's a "C" area and you've talked yourself into thinking it's a "B".  Again, I could be wrong.
4. You can't say "units updated during every vacancy" and still say "100% current occupancy".  Current occupancy is nice and all but if the tenants are brutal on the units so they *need* updating at turnover that's a horrible thing.  For my nicer apartments I've had several turnovers where my property manager pays nothing more than for her handyman to switch the locks out.  I could easily make the argument "units updated during every vacancy" is a massive warning sign.  It might not be but you never know.
5. You've mentioned nothing about cap-ex items so how much life is left in the roof?  What about the HVAC systems?  Is there one giant boiler?  Window air conditioning?  Don't underestimate the cost of pesky things like roofing.  And also don't underestimate the "I'm selling to retire" being super-secret-double-agent-code for "The roof is shot so I either come up with $150K out-of-pocket or I sell".  
6. And with 14 units I'd have to imagine there's shared parking.  Concrete is expensive to replace and it's not even that cheap to reseal.  You'd be surprised how many people never take into account that little item.